Looking at the future from the perspective of performance, how will operators enter the second half of the 5G competition?

2021 is a big year for China's 5G development. Both base station construction and terminal popularization will become important milestones. With the release of a series of important mid-year summary data, we can see the progress of the industry.

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5G network terminal applications are being fully promoted, and the industry value chain is maturing

According to the financial reports released by the three operators, the first half of 2021 saw the best performance in recent years, and also brought about good user development.

In the first half of 2021, China Mobile achieved operating revenue of 443.6 billion yuan, a year-on-year increase of 13.8%. Among them, communication service revenue was 393.2 billion yuan, a year-on-year increase of 9.8%, and the company's net profit was 59.118 billion yuan, a year-on-year increase of 6. China Telecom achieved operating revenue of 219.2 billion yuan, a year-on-year increase of 13.1%, and net profit attributable to the parent company was 17.7 billion yuan, a year-on-year increase of 27.2%. China Unicom's operating income reached RMB 164.2 billion, a year-on-year increase of 9.2%. The total profit in the first half of the year exceeded 10 billion for the first time in recent years, and the growth rate of net profit attributable to the parent company increased by 9.8 percentage points compared with the whole year of 2020.

• China Mobile data showed that the total number of customers reached 947.465 million in July, of which 4G customers increased by 6.602 million, totaling 805.45 million. In July, 5G package customers increased by 28.913 million, totaling 279.608 million.
• Operational data from China Telecom also showed that in July, the number of China Telecom's mobile users increased by 2.13 million, with a total of 364.62 million mobile users. In the same month, the number of 5G package users increased by 7.06 million, with a total of 138.21 million 5G package users.
• During the same period, China Unicom added 1.155 million mobile account users, totaling 311.611 million. Among them, 5G users increased by 7.742 million in the month, totaling 121.072 million.

According to the economic operation of my country's communications industry from January to July 2021 announced by the Ministry of Industry and Information Technology, as of the end of July, the total number of mobile phone users of the three basic telecommunications companies reached 1.619 billion, a net increase of 25.21 million from the end of last year. Among them, the number of 5G mobile phone terminal connections reached 392 million, a net increase of 193 million from the end of last year.

If we simply add them up, the total number of 5G users of the three operators has reached 538 million, which accounts for roughly one-third of the total number of mobile phone users in China.

Due to different definitions, the number of 5G mobile phone users who are actually using 5G networks is probably still some distance away from this number. However, even if calculated based on the number of 392 million 5G mobile phone terminal connections, it has already reached a quarter, reflecting the development speed of the 5G mobile phone business.

According to data from the China Academy of Information and Communications Technology, the sales volume of 5G mobile phones in the Chinese market in July was 228.34 billion units. From January to July this year, my country's 5G mobile phone shipments were 151 million units, a year-on-year increase of 94.3%, accounting for 74.3% of mobile phone shipments in the same period. As of the end of July, the cumulative shipments of 5G mobile phones in the domestic market reached 327 million units.

As of the end of July, the three basic telecommunications companies had developed 1.306 billion cellular Internet of Things terminal users, a net increase of 170 million from the end of last year. Among them, terminal users used in smart manufacturing, smart transportation, and smart public utilities accounted for 17.5%, 17%, and 22.7% respectively. The number of smart public utilities terminal users increased by 26.7% year-on-year, with the most prominent growth.

Data shows that from January to July, the cumulative mobile Internet traffic reached 122.8 billion GB, a year-on-year increase of 38.1%, and the growth rate increased by 4 percentage points year-on-year. Among them, the traffic through mobile Internet reached 117.6 billion GB, a year-on-year increase of 36.9%, accounting for 95.8% of the total mobile Internet traffic. In July, the average mobile Internet access traffic per household (DOU) reached 14.07GB/household/month, a year-on-year increase of 29.2%, and 2.15GB/household/month higher than the end of last year.

The shipment volume of 5G mobile phones almost doubled year-on-year, the proportion of 5G mobile phones continued to increase, the ratio of 5G package users to the number of mobile terminal connections continued to increase, the number of terminal users in the Internet of Things industry application increased significantly, and mobile Internet traffic continued to grow rapidly. All of these indicate an increase in the actual utilization rate of 5G, indicating that the 5G industry is maturing and the value of the 5G industry is at a critical point of explosion.

5G development requires innovation and win-win cooperation

In the future, with the decline in traffic charges and the enrichment of 5G applications, the digital transformation of enterprises and the new "stay-at-home" lifestyle are expected to further push up the demand for 5G applications. High-traffic application scenarios such as short videos, live broadcasts, online video education, and online meetings are becoming mainstream applications for user consumption.

With the continuous expansion of application scenarios such as smart mines, smart factories, and unmanned driving, "5G+Industrial Internet" is transforming from "model room" to "commercial housing", and the development of the industry is entering an acceleration period.

In this context, operators should continue to promote 5G terminal sales, increase the conversion of 5G package users to actual use, and vigorously promote 5G industry applications to increase the driving force of 5G business. Of course, operators have also made efforts. China Mobile's cloud computing business has grown exponentially, and China Telecom's industrial digital business revenue has reached 50.1 billion yuan, a year-on-year increase of 16.8%; 5G government and enterprise applications have gradually entered the harvest period, and 5G application scenarios have nearly doubled compared to the end of 2020.

The real value of 5G lies in supporting the high-quality development of the real economy, and it urgently needs to be integrated with the real economy for application innovation. In this process, operators should always adhere to the 5G development strategy of win-win cooperation and implement it in specific actions, rather than competing with each other or undermining each other.

It is generally believed that the development of 5G business will first bear fruit in industry applications, which has also become a new business growth point and main source of performance for operators. Therefore, several operators have begun to charge forward with all their strength.

Given the historical inertia of several operators, when developing government and enterprise business, they are bound to sabotage each other and undercut each other on price, until the entire blue ocean quickly turns into a red ocean, while the operators' reputation continues to decline in the industry.

Since the birth of 5G, several operators have embarked on a different path of cooperative development. For example, they simultaneously announced the launch of commercial services and cooperated to launch new 5G messages. These are all good starts. What needs to be done next is to truly achieve harmonious coexistence on the market sales and customer service ends.

China Telecom and China Unicom have jointly built and shared in many aspects and achieved good economic benefits. They have reached a level comparable to China Mobile in terms of the speed and scale of 5G network construction, which has also promoted the overall healthy development of China's 5G industry.

Through the joint construction and sharing of 700M resources, China Mobile and China Broadcasting Corporation hope to enable large rural areas to use cheap and easy-to-use 5G networks in the shortest possible time. At the same time, it will help China become the first in the world to build a mature, largest and best-covered 5G industry foundation, which will promote the birth and development of a large number of 5G applications.

Therefore, several operators should continue to follow the thinking mode of the shared economy, further draw on the successful business model experience of Internet platforms over the years, and explore a 5G Internet of Everything industry path suitable for the development of operators.